Financial Independence Around the Holiday Table

After the big holiday dinner has been served and Aunt Beatrice is on her fifth glass of wine and your cousin Will is well into his third mixed drink, family discussions can sometimes go into overdrive. People start talking about politics, finances, and all kinds of things.

For me, it’s usually during this time of the day when the subject of personal finance comes up. I’m usually right in the midst of this discussion because of my history writing about money issues – if I’m not already involved, someone will drag me in.

And then, inevitably, someone will ask Sarah or me about our financial plans. If they’ve heard about them before, we’ll get something like “Are you guys still wanting to retire when you’re 45?” (usually paired with a chuckle). If not, they’ll want to hear about our plans.

And that’s when we talk about financial independence.

To put our plans simply, Sarah and I paid off all of our debts by the age of 30. We then purchased a home and paid the whole thing off in four years. Since then, we’ve essentially been banking my entire income (more or less). Our goal? We want to “retire” between the ages of 45 and 50, but for us that means switching our professional goals to things that might not earn much of an income. I want to do some charitable work and write a novel, for example.

Usually, the idea of “retiring” at any age prior to 65 is followed by a bunch of comments and questions. Here are some of the common ones we hear about our financial independence plans.

It’s worth noting that, in some cases, I’m making some guesses as to the source of the comments that we hear. That’s because I often hear similar kinds of comments from people of similar backgrounds, so it becomes easy to attribute those comments to those life experiences.

It’s also worth noting that the comments that people make are almost exclusively well-meaning. They come from people who are genuinely curious or are genuinely concerned for the choices that Sarah and I seem to be making in our lives. Although in writing they can seem like “busybody” or rude comments, they scarcely come off that way. They usually come out with genuine interest, thoughtfulness, or worry.

When the whole family gets together, you may get peppered with questions about your frugal lifestyle. Photo: Neale A.

Common ‘Holiday Table’ Criticisms of Financial Independence

We hear a lot of different thoughts, opinions, and angles on our financial independence goals.

People who lived through the Depression, most of whom are quite elderly today, often seem to understand financial independence the best. The idea of financial independence is heavily rooted in self-reliance, which is a concept that really hits home for them. They usually seem to just get it.

The biggest concern I’ve ever heard voiced from people of this generation is the idea that many people facing financial independence have much of their money invested in the stock market. The Depression created a deep and intense distrust of the stock market in most Americans of that age and, to an extent, that distrust continues in their children.

Many Boomers tend to view financial independence as being crazy talk, completely in opposition to their life experience. Again, that’s for good reason. Their formative years came during a period in time in the 1960s and 1970s when the social contract between big businesses and employees was very strong. You could get a good paying job straight out of high school and getting a good job with a good company was the ticket to long-term success. That was simply the economic reality of the times. Financial security meant a stable job, a pension, and good health care.

There’s also another interesting factor, one that came at least in part from being children of Depression-era parents. There is often a huge perceived social stigma against having few possessions or a tiny house or, particularly, being an adult without a steady job. It’s perceived that having possessions and having a steady job and having at least a decent home are signs of a stable person and without those things, you’re at the very least showing the world that you’re not stable in some way, that you’re not an active participant in society.

Some people think it’s impossible. They refuse to even believe it’s possible at all unless you do something like start a hugely successful business. In other words, unless your income is incredible, it’s not a path that’s available to you.

The people that believe this either think that you’re buying into some kind of a scam or that you’re trying to sell them on some kind of a scam. I’ve had people act fairly sympathetic to me as though I am gullible or respond with a complete rejection of the “story” I’m “feeding” them.

Others wonder why we would even want to do this. “But why?” is a pretty common question that we hear around the dinner table.

Again, from my own experience, this type of reaction comes from people who are genuinely happy with the lives that they currently have (or believe that they are genuinely happy with it). They like their current lives and don’t really understand why someone would follow a significantly different path, one that would require them to be really frugal for many years (or maybe even the rest of their lives) just so that they would sit around and have nothing to do in a decade or so.

Trust me, I can really understand this perspective. I would not even be considering this path if I thought that it led to a life where I just sat around and did nothing all day. That sounds pretty miserable to me, too. This path is exciting to me because there are many, many things I want to do and try in my life and financial independence opens the doors to having the time and the resources to be able to do them.

Others assume that our jobs form the fundamental structure of our lives and thus we will keep on working regardless of our financial state. They believe that we can build up substantial savings, but the idea that we would choose to no longer work in a traditional income-earning job or at least some kind of freelancing work is not realistic.

Again, this makes sense for many career-oriented people. Careers can provide the central structure of a person’s life and someone choosing to walk away from that when they obviously have the skills to maintain a career can seem really strange.

Still others believe that the process to pull this off must be utterly miserable. This has a kernel of truth to it, depending on your perspective of course. Choosing to save a large portion of your income does mean that you’re going to have to choose to go without a lot of perks. Of course, you have the power to choose which splurges you have in your life and which ones you ship.

I’ve found that it’s not really miserable at all. It’s actually pretty enjoyable to reorient your life around a smaller number of things that you deeply enjoy and focusing on experiences over stuff. However, that can be pretty difficult to articulate.

Some worry about the impact this will have on our children. Are we choosing a path that will enable our children to have a normal childhood or to start off on a financially viable path in life? Will they be able to go to college? Do they have deprived lives?

I don’t view these comments as criticisms of us or our parenting style. Instead, I view them as true concern for our children. Are we really putting our own personal financial goals over some of the things that our children could have? Sure, we probably are. Our children don’t have everything that children could have. The newest video game console in our home is a decade old. The family computer is a hand-me-down. My daughter practices piano on an old keyboard.

Here’s the thing, though. Our children also have a parent waiting for them each day when they get off the bus. We play games together, explore parks together, make meals together, have long conversations together, and practice sports together until there are worn spots in the yard. I will not believe for a second that our children are deprived because we don’t spend as much money as we could because we spend a lot of time with them.

How We Respond

So, how do you respond to these points politely around the holiday dinner table? Here are some of the key points that we make when these kinds of conversations come up.

“We have our money invested in a lot of things for diversification’s sake.” This usually alleviates the fears of grandparents and great grandparents who envision us having all of our money stowed away in a risky stock investment.

It’s true, too. We have some of our money in domestic stocks, some in international stocks, some in bonds, some in real estate, and some in cash, both foreign and domestic. If one of those things begins to struggle, the others will step up to the plate as people change around their investment strategies to compensate.

Will that make enough money? It’s true that we would be likely to earn a better average annual rate of return by having all of our money in one specific type of investment, but we also run the risk of being caught by a downturn in that specific type of investment.

Diversification is important now, but it becomes even more important later on as we actually reach financial independence.

“We’re using financial independence as an opportunity to make a major career change.” This tends to alleviate career-oriented people.

Personally, I love to use the example of transitioning from my current batch of writing gigs into trying my hand at being a novelist. That transition means that at some point I’ll be taking a leap in my career, but I will effectively be remaining in the same career path and devoting time to that career path. My life will maintain the kind of structure that seems familiar to them.

It can also inspire ideas in others about the type of career change that they might want to take on. I’ve found that taking this approach can cause people who were thinking about a career shift to start considering building financial leverage to make that shift happen sooner rather than later.

“We spend our time doing things we enjoy, which actually ends up not costing very much.” This addresses the view that the financial choices you need to make along the path to financial independence must be miserable.

I usually follow this comment up by mentioning the things that we actually do. We read a lot of books – every single person in our family is an avid reader and we are regulars at our local library. We spend a lot of time outside during the spring, summer, and fall months. We play a lot of non-electronic games, both together as a family and in community groups. We make a lot of things, just to learn how it’s done.

These things don’t cost much money at all, yet they fill up most of our family’s free time and free mindspace. There’s really not much interest in spending money on other things because our time is already filled up with activities we care about.

But what about purchases for social status, like clothes and cars and houses?

“Some people want a big house and a brand new car, and that’s cool. We just want to stop working at an earlier age instead.” This is usually the line we use when people start asking questions about other big life goals that people commonly have.

For starters, we don’t really want these things for ourselves. Sarah and I both like the house we have now. Sarah and I both drive cars that are several years old (at least) and have well over 100,000 miles on them. Sarah and I aren’t big wardrobe spenders, either; even her professional wardrobe is purchased pretty frugally.

We don’t really want these things to impress other people, either. To put it quite simply, we don’t have social status as a goal in pretty much any way. It’s not something we think about or care about or value.

It’s one of those maxims that’s repeated again and again in personal finance books. Stop caring what other people think. The thing is, when you really take that to heart, it becomes very easy to live a really frugal life.

“It’s absolutely possible. It just requires a strong commitment over a lot of years.” Sometimes people express complete incredulity about whether our plan is even possible, and this is our typical response. It’s not easy to do it, but it certainly is possible if you take the long approach.

My experience has shown me that people who believe that financial independence is an impossible goal are usually aware that it can actually be done, but that most people aren’t going to make the choices necessary to make it happen. It takes a long term commitment to a fairly high level of frugality, something that modern culture doesn’t really view all that fondly.

In other words, it seems just different enough than the way everyone does things that it appears prohibitively difficult, and when people make seemingly prohibitively difficult choices with their life, other people often react with confusion.

“Health care exchanges and, eventually, Medicare will provide the health care options we need.” When people start digging into the nuts and bolts of the choices that we’re making, one issue that comes up all the time is health care. How will you guys handle health care if you walk away from the workplace?

That simple answer sums up our plans. If we find ourselves in a situation where we’re not employed with a health care plan, we plan to simply take advantage of state health care exchanges to get the health care we need. Sarah is in great health and my only ongoing health condition is my thyroid condition which is addressed pretty well with a single daily Synthroid dosage.

Health care will undoubtedly be an expense for us in the future, but it is something we are accounting for in terms of how much we are saving.

“College costs are going to be high no matter what we do, but spending money just so they appear better on the FAFSA doesn’t strike us as a smart plan.” We’re often asked about our plans for our children regarding their eventual college experiences. Are we going to help them with college? Are our savings going to be used to write fat private college checks for them?

We plan on helping them with college, but we don’t plan on paying for four years of education for them at an expensive private liberal arts school. Instead, we are saving for their college experience using a 529 college savings plan for each of them. We don’t plan on helping them beyond the contents of that savings.

Why not? Why wouldn’t we pay for their college if we have the means? Our feeling is that if we just cut a check for their college experience, it devalues that experience. They don’t see the value of it because they’ve never had to put anything on the line for it. Understanding that is a maturity issue of course, but it’s one that we’re already discussing with our children.

Final Thoughts

The most important thing to remember about these kinds of conversations around the dinner table is that they’re rarely done with maliciousness or anger or negative feelings in mind. Most of the time, questions and comments come up as a result of genuine curiosity or, sometimes, concern over the path that you’re choosing.

Yes, those feelings are often fed by the life history of the person who’s asking the questions, but that doesn’t mean they come from a negative place. It simply means that their life history is telling them that what you’re suggesting is fraught with risk and uncertainty that you might not be seeing.

If you find that your extended family is asking a lot of tough questions about your financial path around the holiday dinner table, don’t take it as an interrogation. Instead, take it as a sign of concern, but also take it as a chance to explain and educate others about financial independence and smart financial choices.

No matter what financial path you’re on, be aware that if you’re trying for anything other than paycheck-to-paycheck living, you’re in a relatively small minority. Less than a quarter of Americans are in good enough financial shape to be able to survive without their next couple of paychecks. To be able to do even that means that you’re a fairly rare bird. Taking it further, to the point of financial independence, is highly unusual.

So don’t be upset when people ask questions and have comments. You’re doing something unusual, and the holiday table is giving you an opportunity to share why you’re doing it.

Just be sure to ignore that cousin of yours who’s had a few too many drinks and is informing you that all of your financial plans will be wrecked by his conspiracy theory du jour.

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